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Norwegian Krone seen with limited upside as Norges Bank buying stays tepid

FXStreet, citing BNY analysis, said EUR/NOK is about 2.5% from its May 12-month low and that NOK purchase needs could ease as energy receipts remain high.

Reported · Written up by our desk · Major Pairs

BNY strategist Geoff Yu, as summarized by FXStreet, said the Norwegian krone (NOK) should still benefit from improving oil and natural gas terms of trade and a Norges Bank viewed as relatively hawkish in Western Europe.

However, the upside is likely capped by the currency’s already-elevated holdings and Norges Bank FX purchases that have been modest. The note argues that higher energy receipts reduce how much Norges Bank must buy NOK for non-oil budget needs, keeping support for the currency “tepid” despite a recent increase in daily buying.

FXStreet also highlighted the risk-reward picture, saying EUR/NOK is only 2.5% away from a 12-month low set in May. The analysis added that rising energy receipts and more subdued domestic inflation and wage growth could keep Norges Bank support from amplifying further.

BNY pointed to recent purchase dynamics, noting that a drop pushed the July NOK requirement to NOK 400 million per day, while also warning there is downside risk to total transactions if energy receipts continue to grow. The firm cautioned investors against chasing broad emerging market FX shorts and instead suggested rotating toward select high-carry commodity exporters like BRL, CLP, and ZAR while staying cautious on NOK.

Latest closeNat gas $2.883 ▲0.6%

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